Does China really want it?

Today, Chinese currency yuan reached at the new high of 6.6830 to the US dollar. It's plain obvious that China's intention is to circumvent criticism from the West at the nearing G7 meeting on its currency policy. It's kind of childish, but China looks like to believe it works.

Nobody believes China seriously wants to appreciate its currency, though China would need it sooner or later if it changes to a more "harmonious" economy. The action just before the international meeting is always China's way to dodge blame and save their face. For example, China announced a massive public spending plan which amounts to 4 trillion yuan just before the G20 meeting in 2008. Also in June this year, a few days before the G20, China suddenly rose its currency. Even recently, China appreciated yuan before Wen met Obama. Who says that China isn't manipulating the currency?

I don't think that the US or Europe withdraws the criticism against China on the currency policy, even though yuan has appreciated a bit. If you appreciate the currency at will, you depreciate the currency in return at will. Also, the core problem in the world isn't excessive consumption, but lack of demand in creditor nations like China. You can't rely on the US or Europe to consume more given their current battered economy. Why is China playing this game? Do they really think that they can persuade the US not to rant them if they change the policy a little bit?

I think that a currency spat only represents part of the problems with China. As I showed previously, China's rise has caused rather tension than reconciliation with neighboring countries. This could be a test case of how China plays a responsible role in the world with its growing might.